[GRAPHIC OF L. ROY PAPP]
PAPP AMERICA-ABROAD FUND, INC.
A No-Load Fund
SEMI-ANNUAL REPORT
JUNE 30, 2000
Managed by:
L. Roy Papp & Associates
6225 North 24th Street
Suite 150
Phoenix, AZ 85016
(602)956-1115 Local
(800)421-4004
E-mail: [email protected]
Web: http://www.roypapp.com
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PAPP AMERICA-ABROAD FUND,
INC. AND THE MORGAN STANLEY WORLD INDEX
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR SINCE INCEPTION
PAPP AMERICA-ABROAD FUND 24.7% 24.7% 19.7%
MORGAN STANLEY WORLD INDEX 11.6% 17.0% 14.3%
<TABLE>
<CAPTION>
[LINE CHART]
YEAR PAPP AMERICA-ABROAD FUND MORGAN STANLEY WORLD INDEX
<S> <C> <C>
12/6/91 $10,000 $10,000
1991 10,994 10,720
1992 11,811 10,158
1993 11,803 12,450
1994 12,725 13,079
1995 17,440 15,848
1996 22,262 17,985
1997 28,910 20,817
1998 35,799 25,882
1999 40,815 32,338
6/30/00 46,468 31,354
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
--------------------------------------------------------------------------------
The investment return and principal value of an investment in the Fund will
fluctuate so that Fund shares, when redeemed, may be worth more or less than
their original cost. This Fund's performance is measured against that of the
Morgan Stanley World Index. Approximately 48% of the sales of the companies in
the Fund's portfolio are derived from foreign sources and 52% are derived from
United States sources. The Morgan Stanley World Index is an unmanaged,
market-weighted index that includes 50% foreign companies and 50% United States
companies. The values shown include reinvested dividends.
2
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
------------------------------
Dear Fellow Shareholders:
In our 1999 Annual Report we expressed some disappointment with our
results for that year, particularly when compared with those of the Morgan
Stanley World Index, against which we compare ourselves, and the Standard &
Poor's 500 Stock Index. Therefore, it is pleasing to report to you that our
performance for the first six months of 2000 eliminated the shortfall for both
the World Index and the S&P 500.
For the six months ended June 30, 2000 our Fund was up 13.9% while the
World Index was down 3.0% and the S&P 500 Stock Index was down 0.4%. Since the
Fund's inception in late 1991 we were up 364.9%, the World Index was up 213.5%,
and the S&P 500 Index was up 363.0%.
As you know, we started this Fund more than nine years ago because we
believed that multi-national United States companies would outperform their
counterparts around the world. With only a few exceptions, we felt most foreign
countries did not have our strict accounting standards, reasonable custodial
fees, SEC disclosure requirements, and a host of other measures we take for
granted. For these reasons, and because we believe well selected American
companies are the best managed and most profitable in the world, we determined
to emphasize America.
A number of mutual fund publications disagree with our position on the
grounds that true diversification requires that a significant portion of one's
assets should be invested in foreign securities. We disagree because we know
that in this global economy the stock markets in the developed nations move in
parallel patterns, that is, when USA markets go up, the European markets are
likely to have a similar trend. It follows then that the important decision is
selecting the right stocks no matter what their country of origin happens to be.
It just so happens that these companies are to be found right here in America.
There are a number of reasons for this. With respect to Europe, Americans
typically work harder and there is much less socialism which severely restrains
the entrepreneur. Asia differs from Europe but lacks the technological know-how
and capital formation necessary to compete with the best United States
companies.
In the long run though the proof is in the pudding. As the chart on the
opposite page shows, our Fund is up 364.9% from its inception on December 6,
1991 while the Morgan Stanley World Index is up 213.5%. This large differential
is quite similar to comparisons of our Fund's long-term performance with other
recognized international indexes. To us, these results validate our overall
investment philosophy.
Warmest regards,
L. Roy Papp, Chairman
July 28, 2000
P.S. On June 30, the Fund distributed $3.26 per share to shareholders of record
June 28 from net long-term capital gains realized in 2000. For those who
reinvest, the distribution simply results in a greater number of shares with a
lesser value per share.
3
<PAGE>
<TABLE>
<CAPTION>
PAPP AMERICA-ABROAD FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
Number Market
Common Stocks of Shares Value
--------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Computer Equipment (22.0%)
EMC Corp. *
(Manufacturer of enterprise computer storage systems) 68,000 $ 5,231,750
Hewlett-Packard Company
(Manufacturer of printers, computers, and supplies) 65,000 8,116,875
Intel Corporation
(Manufacturer of microprocessors, microcontrollers, and memory chips) 258,000 34,491,375
International Business Machines Corporation
(Global provider of information technology, hardware, software,
and services) 40,000 4,382,500
-------------
52,222,500
-------------
Electronic Equipment (18.4%)
American Power Conversion *
(Leading producer of uninterruptible power supply products) 793,000 32,364,312
Molex, Inc.
(Supplier of interconnection products) 318,250 11,138,750
-------------
43,503,062
-------------
Financial Services (16.4%)
American International Group
(Major international insurance holding company) 41,000 4,817,500
General Electric Co.
(Diversified financial and industrial company) 170,000 9,010,000
State Street Corporation
(Provider of U.S. and global securities custodial services) 235,000 24,924,688
-------------
38,752,188
-------------
Industrial Services (12.5%)
Interpublic Group of Companies, Inc.
(Worldwide advertising agencies) 540,000 23,220,000
Expeditors International of Washington, Inc.
(International air freight fowarding) 55,300 2,626,750
Omnicom Group, Inc.
(Worldwide advertising agencies) 18,000 1,603,125
Young & Rubicam, Inc.
(Worldwide advertising agencies) 37,000 2,115,938
-------------
29,565,813
-------------
Pharmaceutical (12.2%)
Eli Lilly & Co.
(Prescription pharmaceuticals) 65,000 6,491,875
Merck & Company
(Prescription pharmaceuticals) 239,000 18,313,375
Pfizer, Inc.
(Prescription pharmaceuticals) 85,000 4,080,000
-------------
28,885,250
-------------
*Non-income producing security.
The accompanying notes are an integral part of this financial statement.
4
<PAGE>
<CAPTION>
PAPP AMERICA-ABROAD FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
Number Market
Common Stocks (continued) of Shares Value
---------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Software (6.0%)
BMC Software, Inc. *
(Develops data and application management software) 30,000 $ 1,094,532
Microsoft Corporation*
(Personal computer software) 165,000 13,200,000
------------
14,294,532
------------
Restaurants (4.2%)
McDonald's Corporation
(Fast food restaurants and franchising) 302,000 9,947,125
------------
Medical Products (3.7%)
Johnson & Johnson
(Healthcare products) 75,500 7,691,563
Medtronic, Inc.
(Manufacturer of implantable biomedical devices) 23,000 1,145,687
------------
8,837,250
------------
Telecommunications (1.8%)
Cisco Systems, Inc. *
(Leading supplier of computer internetworking systems) 34,000 2,161,125
L.M. Ericsson Telephone AB
(Manufacturer of telecom systems and cellular handsets) 40,000 800,000
Tellabs, Inc.*
(Manufacturer of digital cross connect systems for
telecommunications service providers) 18,000 1,231,875
------------
4,193,000
------------
Instruments & Testing (0.8%)
Agilent Technologies*
(Designs and manufactures test and measurment systems for
the electronics and healthcare industries) 24,791 1,828,336
------------
Specialty Retailing (0.7%)
Office Depot *
(Leading retailer and direct marketer of office supplies) 280,500 1,753,125
------------
Miscellaneous (0.8%)
Steiner Leisure Ltd. *
(Provider of spa services, beauty salons, and health
clubs on cruise ships) 80,850 1,829,231
------------
Total Common Stocks - 99.5% 235,611,412
Cash and Other Assets, Less Liabilities - 0.5% 1,182,767
------------
Net Assets - 100% $236,794,179
=============
Net Asset Value Per Share
(Based on 6,429,548 shares outstanding at June 30, 2000) $ 36.83
=============
</TABLE>
*Non-income producing security.
The accompanying notes are an integral part of this financial statement.
5
<PAGE>
<TABLE>
<CAPTION>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
ASSETS
<S> <C>
Investment in securities at market value (original
cost $113,536,157 at June 30, 2000) (Note 1) $235,611,412
Cash 826,402
Dividends and interest receivable 140,719
Receivable for investment securities sold 425,173
------------
Total assets $237,003,706
============
LIABILITIES
Accrued expenses $209,528
============
NET ASSETS
Paid-in capital $116,106,500
Accumulated undistributed net realized gain
on sale of investments 17,491
Accumulated undistributed net investment loss (1,405,067)
Net unrealized gain on investments 122,075,255
------------
Net assets applicable to Fund shares outstanding $236,794,179
============
Fund shares outstanding 6,429,548
============
Net Asset Value Per Share (net assets/shares
outstanding) $ 36.83
============
The accompanying notes are an integral part of these financial statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<S> <C>
INVESTMENT INCOME:
Dividends $ 498,175
Interest 42,294
Foreign taxes withheld (415)
-----------
Total investment income 540,054
-----------
EXPENSES:
Management fee (Note 3) 1,127,650
Filing fees 23,724
Printing and Postage fees 21,933
Custodial fees 16,447
Transfer agent fees 14,329
Accounting fees 7,000
Legal fees 5,094
Directors' attendance fees 4,400
Other fees 26,438
-----------
Total expenses 1,247,015
-----------
Net investment loss (706,961)
-----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Proceeds from sales of securities 50,192,238
Cost of securities sold (30,767,114)
-----------
Net realized gain on investments sold 19,425,124
Net change in unrealized gain on investments 9,364,636
-----------
Net realized and unrealized gain on investments 28,789,760
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $28,082,799
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND
THE YEAR ENDED DECEMBER 31,1999
(UNAUDITED)
Six months ended Year ended
June 30, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss $ (706,961) $ (1,317,557)
Net realized gain on investments sold 19,425,124 10,533,282
Net change in unrealized gain on investments 9,364,636 21,823,990
------------- --------------
Increase in net assets resulting from
operations 28,082,799 31,039,715
------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income - -
Net realized gain on investments sold - previous year (219)
Net realized gain on investments sold (19,407,414) (9,235,258)
------------- --------------
Decrease in net assets resulting from
distributions to shareholders (19,407,633) (9,235,258)
------------- --------------
FROM SHAREHOLDER TRANSACTIONS:
Proceeds from sale of shares 41,411,400 63,363,641
Net asset value of shares issued to shareholders
in reinvestment of net investment income and
net realized gain on investments sold 17,896,510 8,582,551
Payments for redemption of shares (73,799,242) (193,954,940)
------------- --------------
Decrease in net assets resulting
from shareholder transactions (14,491,332) (122,008,748)
------------- --------------
Total decrease in net assets (5,816,166) (100,204,291)
Net assets at beginning of the period 242,610,345 342,814,636
------------- --------------
Net assets at end of period $ 236,794,179 $ 242,610,345
============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNUADITED)
(1) SIGNIFICANT ACCOUNTING POLICIES:
Papp America-Abroad Fund, Inc. (the Fund) was incorporated on August 15, 1991,
and is registered under the Investment Company Act of 1940 as an open-end
diversified management investment company. Operations of the Fund commenced on
December 6, 1991. The Fund invests with the objective of long-term capital
growth in the common stocks of United States companies that have substantial
international activities and, to a much lesser extent, in the common stocks of
foreign enterprises that are traded publicly in United States securities
markets.
The policies described below are followed by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
INVESTMENT IN SECURITIES
For purposes of computing the net asset value of a share of the Fund, securities
traded on securities exchanges, or in the over-the-counter market in which
transaction prices are reported, are valued at the last sales prices at the time
of valuation or, lacking any reported sales on that day, at the most recent bid
quotations. Other securities traded over-the-counter are valued at the most
recent bid quotations. Securities for which quotations are not available and any
other assets are valued at a fair value as determined in good faith by the Board
of Directors. The price per share for a purchase order or redemption request is
the net asset value next determined after receipt of the order.
The Fund's net asset value per share (NAV) is the value of a single share. It is
computed by dividing the market value of a Fund's assets, less its liabilities,
by the number of shares outstanding, and rounding the result to the nearest full
cent. The NAV is determined as of the close of trading on the New York Stock
Exchange, currently 4:00 p.m. New York City time, on any day on which that
Exchange is open for trading.
Investment transactions are accounted for on the trade date (the date the order
to buy or sell is executed). Dividend income is recorded on the ex-dividend date
and interest is recorded on the accrual basis. Realized gains and losses from
investment transactions and unrealized appreciation or depreciation are
calculated on the identified cost basis.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code which are applicable to regulated investment companies. The Code requires
that substantially all of the Fund's taxable income, as well as any net realized
gain on sales of investments, are to be distributed to the shareholders. The
Fund has complied with this policy and, accordingly, no provision for federal
income taxes is required.
(2) DIVIDENDS AND DISTRIBUTIONS:
Dividends and capital gain distributions are reinvested in additional shares of
the Fund unless the shareholder has requested in writing to be paid by check.
Dividends and distributions payable to its shareholders are recorded by the Fund
on the ex-dividend date.
On June 28, 2000, a distribution was declared from net realized long-term
capital gains of $3.26 a share aggregating $19,407,414. The distribution was
paid on June 30, 2000, to shareholders of record on June 28, 2000. The Fund also
distributed $219 of net realized long-term capital gains from the prior year.
On December 29, 1999, a distribution was declared from net realized long-term
capital gains of approximately $1.39 a share aggregating $9,235,258. The
distribution was paid on December 31, 1999, to shareholders of record on
December 29, 1999.
9
<PAGE>
(3) TRANSACTIONS WITH AFFILIATES:
The Fund has an investment advisory and management services agreement with L.
Roy Papp & Associates (Manager). The Manager receives from the Fund, as
compensation for its services, a fee accrued daily and payable monthly at an
annual rate of 1% of the Fund's net assets. The Manager will reimburse the Fund
to the extent the Fund's regular operating expenses during any of its fiscal
years exceed 1.25% of its average daily net asset value in such year. The Fund
incurred fees of $14,329 in 2000 from the manager for providing shareholder and
transfer agent services.
The Fund's independent directors receive $1,100 for each meeting of the Board of
Directors attended on behalf of the Fund. Certain officers and/or directors of
the Fund are also partners of the Manager and shareholders in the Fund. The Fund
made no payments to its officers or directors, except to independent directors
as stated above.
(4) PURCHASES AND SALES OF SECURITIES:
For the six months ended June 30, 2000 and the year ended December 31, 1999,
investment transactions excluding short-term investments were as follows:
2000 1999
----------- -----------
Purchases at cost $15,865,525 $ 15,617,400
Sales 50,192,238 145,756,212
(5) CAPITAL SHARE TRANSACTIONS:
At June 30, 2000, there were 25,000,000 shares of $.01 par value capital stock
authorized. Transactions in capital shares of the Fund were as follows:
Proceeds Shares
-------------- -------------
Six months ended June 30,2000
Shares issued $41,411,400 1,083,973
Dividends reinvested 17,896,510 492,468
Shares redeemed (73,799,242) (2,029,622)
------------- -----------
Net decrease $(14,491,332) (453,181)
============= ===========
Year ended December 31, 1999
Shares issued $63,363,641 2,000,223
Dividends reinvested 8,582,551 242,584
Shares redeemed (193,954,940) (6,030,591)
------------- -----------
Net decrease $(122,008,748) (3,787,784)
============= ===========
(6) UNREALIZED APPRECIATION:
Unrealized appreciation of portfolio securities for both financial statement and
federal income tax purposes is as follows:
2000 1999
-------------- -------------
Market value $235,611,412 $241,148,366
Original cost (113,536,157) (128,437,747)
-------------- -------------
Net unrealized appreciation $122,075,255 $112,710,619
============== =============
As of June 30, 2000, gross unrealized gains on investments in which market value
exceeded cost totaled $123,721,874 and gross unrealized losses on investments in
which cost exceeded market value totaled $1,646,619.
As of December 31, 1999, gross unrealized gains on investments in which market
value exceeded cost totaled $114,096,795 and gross unrealized losses on
investments in which cost exceeded market value totaled $1,386,176.
10
<PAGE>
<TABLE>
<CAPTION>
(7) SELECTED FINANCIAL HIGHLIGHTS:
The following selected per share data has been calculated using revenues and
expenses for the periods indicated, divided by the weighted average number of
shares outstanding during the periods. The ratios are calculated using the
revenues and expenses for the periods, divided by the weighted average of the
daily net assets of the Fund.
Six Months Ended
June 30, Year Ended December 31,
2000 1999 1998 1997 1996 1995
-------------- ------------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $35.25 $32.13 $25.98 $20.11 $16.47 $12.24
Income from operations:
Net investment (loss)/income (0.13) (0.23) (0.05) 0.01 0.01 0.04
Net realized and unrealized gain
on investments 4.97 4.74 6.24 6.00 4.48 4.52
-------------- ------------- ------------ ------------ ------------ -------------
Total from operations 4.84 4.51 6.19 6.01 4.49 4.56
Less distributions:
Dividend from net investment
Income - - - (0.01) (0.01) (0.04)
Distribution of net realized gain (3.26) (1.39) (0.04) (0.13) (0.84) (0.29)
-------------- ------------- ------------ ------------ ------------ -------------
Total distributions (3.26) (1.39) (0.04) (0.14) (0.85) (0.33)
Net asset value, end of period $36.83 $35.25 $32.13 $25.98 $20.11 $16.47
============== ============= ============ ============ ============ =============
Total return 13.85% 14.01% 23.83% 29.92% 27.65% 37.05%
============== ============= ============ ============ ============ =============
Ratios/Supplemental Data:
Net assets, end of period $236,794,179 $242,610,345 $342,814,636 $288,249,294 $29,623,497 $15,988,267
Expenses to average net
assets(A) 1.10%* 1.07% 1.08% 1.11% 1.25% 1.22%
Investment income to
Average net assets (B) 0.48%* 0.61% 0.82% 1.24% 1.30% 1.50%
Portfolio turnover rate 13.90%* 5.47% 24.97% 4.71% 12.29% 26.65%
</TABLE>
*Annualized
(A) If the Fund had paid all of its expenses and there had been no
reimbursement by the investment adviser, this ratio would have been 1.30%
for the year ended December 31, 1996.
(B) Computed giving effect to investment adviser's expense limitation
undertaking.
11
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
DIRECTORS
James K. Ballinger L. Roy Papp
Amy S. Clague Rosellen C. Papp
Robert L. Mueller Bruce C. Williams
Harry A. Papp
OFFICERS
Chairman - L. Roy Papp President - Harry A. Papp
VICE PRESIDENTS
Victoria S. Cavallero Julie A. Hein
George D. Clark, Jr. Robert L. Mueller
Jeffrey N. Edwards Rosellen C. Papp
Robert L. Hawley Bruce C. Williams
Secretary - Robert L. Mueller
Treasurer - Rosellen C. Papp
Assistant Treasurer - Julie A. Hein
INVESTMENT ADVISER
L. Roy Papp & Associates
6225 North 24th Street, Suite 150
Phoenix, AZ 85016
Telephone: (602) 956-1115
Web address: http//www.roypapp.com
Email address: [email protected]
CUSTODIAN
Founders Bank of Arizona
7335 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
SHAREHOLDER SERVICES AND TRANSFER AGENT
L. Roy Papp & Associates
6225 North 24th Street, Suite 150
Phoenix, AZ 85016
Telephone: (602) 956-1115
(800) 421-4004
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
501 North 44th Street, Suite 300
Phoenix, Arizona 85008
LEGAL COUNSEL
Bell, Boyd & Lloyd
70 West Madison Street
Chicago, Illinois 60602
This report is submitted for the general information of the shareholders of the
Fund. The report is not authorized for distribution to prospective investors in
the Fund unless it is accompanied or preceded by a currently effective
prospectus of the Fund. No sales charge to the shareholder or to the new
investor is made in offering the shares of the Fund.
